Question

Yancey Productions is a film studio that uses a job order costing system. The company's direct materials consist of items such as costumes and props. Its direct labor includes each film's actors, directors, and extras. The company's overhead costs include items such as utilities, depreciation of equipment, senior management salaries, and wages of maintenance workers. Yancey applies its overhead cost to films based on direct labor dollars. At the beginning of the year, Yancey made the following estimates Direct labor dollars to support all productions Fixed overhead cost Variable overhead cost per direct labor-dollar $ $ 8,710,000 5,226,000 0.08 Required: 1. Compute the predetermined overhead rate. 2. During the year, Yancey produced a film titled You Can Say That Again that incurred the following costs: Direct materials Direct labor cost $ $ 1,426,000 2,613,000 Compute the total job cost for this particular film

Answer 1

Answer with working notes is given below

1 Pre-determined fixed overhead rate Fixed overhead $5,226,000 60.00% Direct Labor cost $8,710,000 Total job cost Direct Material Direct Labor Variable Overheads Fixed Overhead Total job cost $1,426,000 $2,613,000 $209,040 ($2,613,000 * $0.08) $1,567,800 (60% of $2,613,000) $5,815,840